Alpha Geek

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Category > Business & Finance Posted 28 May 2017 My Price 7.00

Suppose that a typical taxpayer has a marginal personal income tax rate of 35 percent

Suppose that a typical taxpayer has a marginal personal income tax rate of 35 percent The nominal interest rate is 13 percent and the expected inflation rate is 8 percent.

 

a. What is the real after-tax rate of interest?

b. Suppose that the expected inflation rate increases by 3 percentage points co II per-cent, and the nominal interest rate increases by the same amount What happens to the real after-tax rate of return? yr. If the inflation rate increases as in part b, by how much would the nominal interest rate have to increase to keep the real after-tax interest ram at the same level as in part a? Can you generalize your answer using an algebraic formula?

 

 

 

Answers

Alpha Geek
(8)
Status NEW Posted 28 May 2017 07:05 AM My Price 7.00

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file 1495957877-2273574_1_636314961045826658_a.docx preview (237 words )
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